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ELCPartially Allowed· [2017] KEELC 1318 (KLR)

Nahashon Kimtai Metto v Agricultural Finance Corporation & another [2017] KEELC 1318 (KLR)

Environment and Land Court
24 August 2017
MNMwangi Njoroge
1,994 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~8 min to read original · ~4 min brief

The bottom line

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A Kenyan court stopped an auction because the lender could not prove the borrower properly received the statutory notice before sale.

What this practically means

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Executive summary

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This is a ruling by the Environment and Land Court at Kitale on the plaintiff's Notice of Motion dated 20 June 2017 seeking a temporary injunction to restrain the defendants from auctioning land parcel LR No. Kwanza/Kwanza Block 5 (Korosi)/114, charged to secure a loan of Ksh.198,000 advanced by the 1st defendant in February 2009. The plaintiff admitted the loan and repayment of Ksh.150,000, but complained that no statement of account had been furnished, no 90-day statutory notice served, and that auctioning a 19.4-acre farm worth over Ksh.15 million for a debt of about Ksh.409,410 was unconscionable and contrary to Section 33 of the Agricultural Finance Act. The 1st defendant, through a legal officer's affidavit, established the loan, default, demands, statutory notice, a 45-day redemption notice and notification of sale served on the plaintiff's son, and a valuation. Applying Giella v Cassman Brown, the court found the indebtedness undisputed but noted the plaintiff's serious denial of service of the statutory notice, holding that sufficient doubt as to service at the interlocutory stage raised the probability of a prima facie case, reserving the issue for trial. Irreparable loss was found likely since the security's value exceeded the debt and the plaintiff resided on the land. The balance of convenience favoured preservation of the suit land. The court confirmed the temporary injunction issued on 21 June 2017 pending the hearing and determination of the suit, with the applicant to bear the costs of the application.

Key legal issues

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01

Prima facie case

Holding

Debt was owing and the land charged, but serious dispute over service of the statutory notice raised a probability of a prima facie case

Reasoning

Indebtedness and the charge were not denied, and the plaintiff could not show demand for a statement of account or efforts to liquidate the acknowledged debt. However, the plaintiff seriously disputed being served with the statutory notice. The court held that sufficient doubt as to service at interlocutory stage raised the probability of a prima facie case, leaving the issue for the main trial.

p. 4
02

Irreparable damage

Holding

Plaintiff likely to suffer irreparable loss if the security is disposed of before trial

Reasoning

The court found that even the 1st defendant did not dispute that the security was worth far more than the debt (valuation of Ksh.8.7 million against a debt of about Ksh.409,410), and that the plaintiff resided on the land, so loss of it would not be adequately compensated in damages.

p. 4
03

Balance of convenience

Holding

Balance of convenience favours granting the interim injunction to preserve the land and the plaintiff's residence

Reasoning

Since the suit was at its infancy and the issues could not be fully decided at that stage, the court resorted to the balance of convenience. Preserving the suit land, which was also the plaintiff's residence, tilted the balance in favour of maintaining the interim injunction pending the hearing and determination of the suit.

p. 4

Legal principles established

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  • Principles for granting interlocutory injunctions: prima facie case, irreparable injury, balance of convenience
  • Serious doubt as to service of the statutory notice at interlocutory stage raises the probability of a prima facie case

Court orders

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  1. 1.Prayer No. 3 in the application dated 20/6/2017 granted
  2. 2.The order of temporary injunction issued on 21/6/2017 and later extended is confirmed pending the hearing and determination of the suit
  3. 3.Costs of the application to be borne by the applicant

Authorities

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Legislation

  • Agricultural Finance ActSection 33
  • Auctioneers RulesSection 15(c)

Cases cited (2)

  • Giella Vs Cassman Brown And Company Ltd
    (1973) EA 358
  • E.A. INDUSTRIES -VS- TRUFOODS
    (1972) EA 420
Jurisdiction invoked
Original civil jurisdiction over a dispute concerning land charged as security (Land Act statutory power of sale); court not stated expressly

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Nahashon Kimtai Metto v Agricultural Finance Corporation & another [2017] KEELC 1318 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1318/eng@2017-08-24

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.